On Thursday, the major U.S. market indices declined by more than 1% as concerns that the Federal Reserve will continue raising interest rates to control rising prices were fed by data showing stronger-than-expected inflation and a decline in weekly jobless claims.

Notwithstanding the tighter monetary policy, producer prices increased by 0.7% in January, exceeding the projection of a 0.4% gain, according to Labor Department data.

Another set revealed that, surprisingly, the number of Americans submitting new claims for unemployment benefits decreased last week, providing another proof of the economy’s resiliency.

According to Chris Zaccarelli, chief investment officer at Independent Advisor Alliance in Charlotte, North Carolina, “you’re seeing the inflation numbers continue to be higher than expected and not really showing disinflation, and now the expectations are that the Fed is likely to take rates higher and be more aggressive going forward.”

“You’re also seeing the job market still very strong, with jobless claims coming in less than expected.”

The primary stock indices have risen this year after a disastrous 2022 due to positive results and anticipations that the U.S. central bank will move to slower rate increases.

However, signs of a resilient economy and an acceleration in January consumer prices have recently raised concerns among traders that the Fed may not hit a pause on its hawkish policies anytime soon, with hopes of rate cuts later this year receding further.

The Fed is seen pushing the benchmark rate above the 5% mark by May and keeping it above those levels until year-end.

The S&P 500 was down 46.70 points, or 1.13%, to 4,100.90, while the Nasdaq Composite was down 136.01 points, or 1.13%, to 11,934.59. The Dow Jones Industrial Average was down 383.90 points, or 1.12%, at 33,744.15, and the S&P 500 was down 46.70 points, or 1.13%.

All the 11 major S&P 500 sectors posted losses of more than 1%, with real estate leading the declines.

According to Cleveland Fed President Loretta Mester, inflation remains too high, they also suggested she was willing to raise rates more than what her colleagues desired at the most recent monetary policy meeting. 

Traders will closely examine the St. Louis Fed President James Bullard’s comments to determine the Fed’s stance on monetary policy.

As U.S. Treasury yields increased, shares of high-growth companies like Tesla (NASDAQ:TSLA), Nvidia (NASDAQ:NVDA), Alphabet (NASDAQ:GOOGL), and Apple Inc. (NASDAQ:AAPL) declined between 0.8% and 2.7%.

Cisco Systems Inc (NASDAQ:CSCO) rose 5.1% to hit a nine-month high after the network gear maker raised its full-year earnings forecast.

Roku (NASDAQ:ROKU) Inc soared 14.9% after the company forecasted first-quarter revenue above Wall Street estimates.

After predicting sluggish sales growth for the current quarter despite price increases and new product launches, Canadian e-commerce company Shopify (NYSE:SHOP) Inc saw its stock fall 15.8%.

Declining issues outnumbered advancers for a 5.76-to-1 ratio on the NYSE and a 2.82-to-1 ratio on the Nasdaq.

The Nasdaq saw 28 new highs and 22 new lows, compared to the S&P index’s two new 52-week highs and one new low.